Mala Prohibita Inc. is evaluating a proposal to acquire a new equipment. The equipment would quire an investment of P417,860, including freight and installation cost of P40,000. It expected to have a 10- ar life with no scrap value at the end of its life. It has been estimated that the new equipment would increase e company's cash inflows, net of expenses and income taxes by P68,000. The company can issue its 7% ,000 par value bond to fund the project. The same type of bond is available in the market at P932.04836 per ond with interest payable semi-annually for ten years. The company is subject to 32% income tax. Determine the Cost of Capital (k) Using NPV and IRR method, give your recommendation if the company should push the project or not. Explain your answe

Mala Prohibita Inc. is evaluating a proposal to acquire a new equipment. The equipment would quire an investment of P417,860, including freight and installation cost of P40,000. It expected to have a 10- ar life with no scrap value at the end of its life. It has been estimated that the new equipment would increase e company's cash inflows, net of expenses and income taxes by P68,000. The company can issue its 7% ,000 par value bond to fund the project. The same type of bond is available in the market at P932.04836 per ond with interest payable semi-annually for ten years. The company is subject to 32% income tax. Determine the Cost of Capital (k) Using NPV and IRR method, give your recommendation if the company should push the project or not. Explain your answe

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 13P

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